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There’s this nationwide “thing” called the American Bar Association. In each state, there’s another “thing” dubbed the “State Bar Association”. Each State (Incorporated) has some sort of judicial review board; however, the number of judges being brought before said boards has diminished of late. And here we thought the legal community would police itself; however, there may be reasons for why more judges aren’t “taken to task” for their misdeeds. It’s the “good ‘ol boy club”.
The American Bar Association (“ABA) has laid out Judicial Canons for judges to abide by. The legal codes promulgated by the ABA also mandates that attorneys report judges for alleged misconduct. This isn’t happening as regularly as it should because the attorneys AND the judges are all members of the same clique … the Bar. No one wants to be considered disloyal and/or risk having a judge pissed off enough to “go after” the lawyer’s bar card for ratting him/her out. Even worse, the attorney has to face that judge time and again and the judge will rule against them for snitching to the Bar or Judicial Review panel about the judge’s lack of candor or egregious behavior in court.
That’s the primary reason many homeowners have become frustrated after paying foreclosure defense lawyers gobs of money for services rendered only to find out later that they’ve hit the proverbial “brick wall” and the attorney can’t help them any further because the attorney won’t risk being complained about to the Bar. Many attorneys have told me that Bar attorneys are what they are because “they can’t get a job in the real world”, so they get paid to “supervise the behavior” of other attorneys, which in essence, puts them on a power trip.
Many Bar Associations have consumer advocacy boards within them, which have civilians on their boards in the hopes that these folks will help the Bar boards to take a more practical look at the complaints to see if they lack merit or it’s simply some consumer bitching about the way the judge ruled or what their attorney did to them (or didn’t do for them) that caused their case to be dismissed. In other words, “We’ll take your money because you’ve got a great case!” and … like a used car salesman, once they’ve raided your bank account/credit cards and maxed you out of funds, when the next payment demand can’t be met, they withdraw from your case and the judge lets them do it.
When it comes to foreclosure defense, the game is no different, which is one reason I cannot accept that “point of no return” where the attorney becomes indifferent to the client because the client wants justice and can’t get it through the “standard” channels. A lot of this is due to a lack of education and a rigging of the case law across the various states and federal government.
ARTICLE 1 ADMINISTRATIVE SYSTEM
Attorneys are not quick to admit that the game is being played in the Administrative Court system. After all, Article 1:10:1 of the Constitution does say, “… the obligation of a contract shall not be impaired”. If you are facing foreclosure, the excuse given is, “Well, you signed the mortgage or deed of trust and Note, so therefore, you’re in default and your home is fair game!” Homeowners who have a lot of equity don’t realize how the cards were dealt in the first place … and neither do their attorneys.
Judges play along with the “narrative” established by the banks, mostly because their state pension funds are invested in these pools of mortgages. That frankly is a bad move on the part of the State in investing in these toxic hedge funds. What the homeowners who face foreclosure don’t realize is that a majority of the loans were securitized and securitization in of itself, comes with caveats, unknown to both the homeowners and their lawyers.
Because the judges and attorneys coming before them do not fully understand the tenets of the Uniform Commercial Code (Articles 3, 8 and 9) and how securitization operates, they tend to adhere to the banks’ narratives. This frustrates the attorneys because once they find out the truth, the judges ignore their amended pleadings. At that juncture, the homeowner facing foreclosure is at a complete disadvantage.
Bar complaints and Judicial Review complaints are disregarded if they’re based on the judge’s ruling and not on the judge’s bias, prejudice or egregious behavior, which is where the rubber meets the road.
When attorneys are faced with the inevitable, they bail on the client … “Oh, well, it was a good run while it lasted.” (How many of you have heard that?) Or, in the alternative, the attorney wants another $10,000 to appeal what the homeowner considers a “bad decision” on the part of the judge, who the homeowner thinks wasn’t presented with all the facts. This is why pro se litigants get into trouble in today’s court system because they tend not to realize HOW the game is being played against them. As a result, they tend to complicate things by operating “outside the box” when the “system” clearly offers them options when the homeowners are faced with obvious bias on the part of the Court and their attorney won’t do anything about it.
FRAUD VITIATES CONTRACTS
There is a real U.S. Supreme Court case that posits the foregoing headline …
United States v. Throckmorton, 98 U.S. 61, 66 (1878), which states:
“Fraud vitiates every thing, and a judgment equally with a contract — that is, a judgment obtained directly by fraud, and not merely a judgment founded on a fraudulent instrument; for in general the court will not go again into the merits of an action for the purpose of detecting and annulling the fraud. . . . Likewise, there are few exceptions to the rule that equity will not go behind the judgment to interpose in the cause itself, but only when there was some hindrance besides the negligence of the defendant in presenting the defense in the legal action. There is an old case in South Carolina to the effect that fraud in obtaining a bill of sale would justify equitable interference as to the judgment obtained thereon. But I judge it stands almost or quite alone, and has no weight as to the judgment obtained thereon. But I judge it stands almost or quite alone, and has no weight as a precedent.”
The case he refers to is Crauford v. Crauford, 4 Desau. (S.C.) 176. See also Bigelow on Fraud 170- 172.
WHERE HOMEOWNERS FAIL
Homeowners are not well versed in securitization. That puts them on a level playing field with both the attorney they retain to represent them in a foreclosure case as well as the judge hearing it (unless you’re in the Southern or Eastern U.S. District Courts in New York, where the judges are very well versed in the subject matter and demand the attorneys plead their cases succinctly in order to get the desired ruling).
Most securitized mortgage contracts have commonalities:
- MERS is involved. You’ll find an 18-digit MIN (mortgage identification number) on Page 1 of your contract.
- Paragraph 25 (or something similar) declares that the homeowners (borrowers) waive their right to a jury trial (opting for a trial to the bench, where the judge who is uninformed gets to give away their homes).
- The homeowner is referenced within the Note and Mortgage (Deed of Trust) as the “Borrower”, when in fact, that’s not true.
- The homeowner was unaware that all of his credit and financial information (credit history, credit scores, financial documents and loan application) were turned into a dataset and securitized the moment the application was submitted to the securitization loan broker, who then went out, using the dataset, and committed identity theft on Wall Street, pimping the newly-converted bond (what the dataset became when it was entered into the MERS System®) across the secondary mortgage markets, looking for a mortgage pool to fund the mortgage broker’s loan application (the real “Borrower” was the mortgage loan broker).
- The homeowner (as “Borrower”) does not realize that Wall Street and the originating lender were making money off the dataset/bond from the time the homeowner submitted the loan application.
If the homeowner failed to “close” the deal (at the title company), the bond was still out in the secondary mortgage market, being pimped to investors as a legitimate, qualified loan when in fact, it was never consummated by the unsuspecting homeowner.
Now I’ve run across two cases where the loans were never consummated or drawn down on (both were Home Equity Lines of Credit or HELOCs) and the homeowners either lost their home or are about to if they don’t do something drastic to stop the foreclosure.
The foreclosure defense attorneys have no idea of any of this (well, very few do). The majority of the practicing lawyers and judges out there do not know the necessary fundamentals of securitization of mortgage loans, because if they did, the outcome would probably be the same as the Credit River case (First National Bank of Montgomery v. Jerome Daly, 1968).
Unfortunately, the judge in the case died under mysterious circumstances and the case documents magically disappeared and Daly was eventually disbarred. If that doesn’t give conspiracy theorists something to talk about … well … the banking system in America doesn’t tolerate the arguments Daly posited in his own case. The U.S. Government has made agreements with the private Federal Reserve Bank to protect it at all costs and in 1999, when MERS Version 3 became a corporate reality, then- President William Jefferson Clinton signed the Gramm-Leach-Bliley Act into law, which effectively repealed the Glass-Steagall Act of 1934 and allowed the banks to play in the securitization markets.
Most of the readers of this blog pretty much understand what a “stacked deck” is, but the attorneys and judges don’t care. The way they see it, the way the “system” mandates it, you the homeowner, signed a contract at the closing table, declaring that you were lawfully seized of the property before entering into a mortgage contract, therefore, you had the right to convey an interest in the property (and not the property itself) to the “Lender” (which in securitization was actually the “Borrower”). The homeowner, not realizing he’d been duped the moment he turned in his mortgage loan application, showed up at the closing table and locked himself into a contract that had already been making money as a bond in the secondary mortgage markets!
In many instances, the alleged loans were “insured” against default, which meant that once the homeowner (who thought he was the “Borrower”) quit making his mortgage payments, the Servicer filed a claim with the insurance company and was paid face value of the mortgage (less 27% administrative costs).
WHAT THE HOMEOWNER WASN’T TOLD …
The unsuspecting homeowner was not told that …
- He was a third-party accommodation to a mortgage securitization contract.
- His mortgage loan was actually bonded and securitized before he went to the closing table.
- The mortgage “lender” was the real “borrower” and not the homeowner.
- The mortgage “lender” was completely reimbursed for the 5% funds it put up at the front end of the deal, meaning the securitized mortgage broker was free to go out and repeat the process again with a new “sucker”.
- The “mortgage securitization loan broker” misrepresented to the homeowner that the homeowner was the “borrower” when in fact, the loan broker signed agreements (through its servicer) to enter the MERS System® without the knowledge and consent of the borrower, concealing the fact that upon submission of the loan application and BEFORE signing the contract and being awarded a DEED to the property the homeowner was making a loan application to buy, the homeowner (as Borrower) unknowingly signed and encumbered a property he didn’t have the right to convey in the first place because the secondary mortgage markets were already making money off of his signature.
WAS THIS FRAUD?
OR WAS THIS FRAUDULENT CONCEALMENT AND FRAUDULENT MISREPRESENTATION?
Better look up the elements of each before proceeding.
It’s not all about the judge’s ruling either. It’s about the attorney’s being afraid to tell the truth in a way the judge can understand.
Dave Krieger is the host of The Krieger Files, airing Monday-Friday on LibertyNewsRadio.com and on Global Star 3 satellite (Ch. 1) at 8:00 a.m. Central time.
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